Archives for category: Collectibles

A company’s most important asset is its customers.  They are extremely expensive to acquire, but keeping them happy is incrementally inexpensive.  Happy customers buy more product and stay in programs longer.  They are more responsive, and potentially purchase large multiples of product, or higher margin deluxe versions.  They are your best advocates.  What is the lifetime value of a happy advocate?

My first job after university was as a program manager at The Danbury Mint (MBI) overseeing various collectibles (dolls, plates, ornaments, die-cast cars, etc).  Most programs were sold as a one-shot, then converted in-shipment (and through follow-up mailings) to the rest of the series (typically a collection of either 4, 8 or 12 items).  The customer acquisition cost often exceeded 50% of the retail price, and on larger series could be 200%.  If a customer only bought the lead item, the amount of profitable marketing available was minimal.  Through conversions to the rest of the collection, the average customer purchased 2.2 to 2.7 products in a four-item program.  This additional margin allowed us to mail deeper inside, as well as, more outside lists.  Since lead customers were so expensive to acquire, it was vital that we treated them like gold.  It was essential that products shipped quickly, with packaging that would enhance the customer experience.  This was a fantastic educational experience on the lifetime value of a customer.

Direct Response is a fantastic medium that can ramp-up quickly and effectively in a test-expand approach.  Unfortunately, too many marketers focus only on the short term, with a one and done mentality; they often ignore the longer-term value of customers at the expense of immediate profits.  Think more from your customer’s perspective.  Have diligent inventory management so that shipments are never delayed and make sure to regularly ship product to yourself.  How does the product arrive?  Are the proper additional offers enclosed in package?  Is the unboxing experience impressive to your customer?  Is he incentivized to reorder?  Is she incentivized to tell a friend?

Treating the customer well may be slightly more expensive today, but invaluable for tomorrow.

An area which companies do not focus enough attention on, yet is just as important as the offer, is the upsells.  Most companies focus on customer acquisition, because it determines the viability of a campaign, but it’s the back-end of a successful campaign that truly determines your bottom line.  Optimizing the back-end can be the single most important aspect to increase a company’s profitability.  The back-end is broken into two parts.  The first consists of the upsells (to the TV product) offered during the IVR/web order.  The customer is calling because he/she is excited about the TV offer; therefore, sell her more of what she wants.  Deluxe versions typically work best, then offer additionals at a discount with free shipping. The upsells should be extremely well connected to the initial TV offer.  Continuities can be very successful in the upsell stream of collectible products.  A well-designed continuity can receive 25% response and can account for 50% of your overall RPO (revenue per order), depending on the offer and it’s location in the upsell stream.  Continuities typically do not lend themselves to low priced, mass-market products.

The target RPO from a $10 TV offer should be about $60, much higher than that will likely cause significant problems with credit card charge back and returns.  Each upsell takes away from the response of future upsell offers as the customer’s attention span wanes; too many upsells causes the IVR length to lengthen unacceptably.  I have listened to IVRs that can run 18 minutes.  This causes significant frustrations for the customer and can easily lead to customer input errors that again lead to increased charge backs and returns.  It is important to A/B test upsell position order as well as price points to optimize your upsell stream.

We had previously designed six different die-cast car continuities, and were designing a new series.  To launch a new continuity, we would give away the lead car with purchase of two other cars.  The lead car was typically the strongest, best-known car in the collection.  We tried to improve the quality and detail of each successive continuity.  We wanted to give the customer more, while not increasing our production or development costs.

The lead car in this new continuity was the 1953 Corvette, beautiful polo white with red interior, the first Corvette made.  The car looked great as a sleek convertible or as a sporty ragtop.  We even argued which photo would look best as the brochure cover shot.  We designed the die-cast model to have a removable top, which  gave us the best of both worlds, and allowed the customer to display this legendary car as either a convertible or ragtop.  Our development and product costs were virtually unaffected, and the dual displays made for fantastic photographs in the brochure.  The response rates for the new continuity were the highest we had seen in several years, in my opinion, because we were able to give the customer more without increasing the price.

A collectible is a niche product; this has its advantages and disadvantages.  I have found a success rate for collectible television spots of better than 1 in 4 while successful mass market spots range from 1 in 20 to 1 in 40+.  Collectibles will never do the overall sales of a mass market product, however, product niches can often be targeted very successfully.  For the Obama Presidential Coins, one individual station accounted for 50,000 customers.

Programming also is more impactful on a niche product.  On a recent campaign, spots airing on a profitable station did 2.5x to 3x when the spot ran on a program that was related to the genre of the collectible and over 7x when the programming concerned the actual subject matter of the product.  Typically it was only an additional 10% expense to make sure that we aired during specific shows.

Niche products require more of an exacting pinpoint rather than shotgun approach.  They do not offer the retail opportunity, however niche product customers have a higher lifetime value, as they often continue to purchase similar products in the future.  Niche products do not offer the home-run potential of a mass market product, but they definitely offer a better batting average.

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